EU-Japan

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EU-Japan Economic Partnership Agreement Enters into Force

As of February 1st, 2019 the EU and Japan’s Economic Partnership Agreement (EPA) entered into force. The trade agreement aims to remove barriers, shape global trade rules, and send a powerful message that two of the world’s largest economies reject protectionism.

On the 8th of December 2017, the negotiations were finalized and in December of 2018 the European Parliament endorsed the agreement. The new bilateral trade agreement will open Japan’s service market to EU firms and has the potential to increase EU job opportunities as a result of increasing FDIs. The new agreement will also lead to a growth in the green industry by increasing green tech and setting strong standards for workers and the environment.

Member of the European Parliament and rapporteur in charge of the trade agreement, Pedro Silva Pereira, made a statement to the public about the new agreement where he stated, “Today’s approval is a key milestone for fair trade based on rules and values, amid rising protectionism. The agreement will help promote high standards and strengthen sustainable development in trade policy. The European Parliament is sending a very progressive message and will continue to do its part, so that the biggest EU bilateral trade agreement truly works for both citizens and businesses“.

The EU-Japan EPA will facilitate trade between the EU and Japan creating new business opportunities for both sides. According to Kazuo Kodama, Japanese Ambassador to EU: “This will create a huge, free-trade zone, which comprises 640 million people of EU and Japan. And also the combined GDP total will amount to one-third of the global GDP. So this will be a great opportunity for enhancing the welfare of the people in Europe and Japan“.

EU – Japan reach an agreement on Trade deal

Mr. Donald Tusk, President of the European Council, Mr. Jean-Claude Juncker, President of the European Commission, and Mr. Shinzo Abe, Prime Minister of Japan, met in Brussels today for the 24th Summit between the European Union (EU) and Japan and have reached an “agreement in principle of the Economic Partnership Agreement and the Strategic Partnership Agreement at political level”.This agreement in principle on the main elements of an “EU-Japan Economic Partnership Agreement” will be the most important bilateral trade agreement ever concluded by the EU .ESF issued a short press release today to welcome the political agreement and encourage a swift conclusion.

This agreement in principle on the main elements of an “EU-Japan Economic Partnership Agreement” will be the most important bilateral trade agreement ever concluded by the EU.

For the EU and its Member States, the Economic Partnership Agreement will remove the vast majority of duties paid by EU companies, which sum up to €1 billion annually, open the Japanese market to key EU agricultural exports and increase opportunities in a range of sectors. It sets the highest standards of labour, safety, environmental and consumer protection, fully safeguards public services and has a dedicated chapter on sustainable development. It also builds on and reinforces the high standards for the protection of personal data that both, the EU and Japan, have recently entrenched in their data protection laws.

The President of the European Commission Jean-Claude Juncker, the President of the European Council Donald Tusk, and the Prime-Minister of Japan Shinzo Abe made the announcement on the conclusion of the agreement in principle during the EU-Japan Summit.

President Juncker said: “Today we agreed in principle on an Economic Partnership Agreement, the impact of which goes far beyond our shores. Through this agreement, the EU and Japan uphold their shared values and commit to the highest standards in areas such as labour, safety, environmental or consumer protection. Working towards mutual adequacy decisions, we also make a strong commitment to uphold the fundamental right of data protection. Together, we are sending a strong message to the world that we stand for open and fair trade. As far as we are concerned, there is no protection in protectionism. Only by working together will we be able to set ambitious global standards. This will be the message that the EU and Japan will bring together to the G20 tomorrow.”

Commissioner for Trade Cecilia Malmström added: “This agreement has an enormous economic importance, but it is also a way to bring us closer. We are demonstrating that the EU and Japan, democratic and open global partners, believe in free trade. That we believe in building bridges, not walls. With Japan being the fourth largest economy of the world with a big appetite for European products, this is a deal that has a vast potential for Europe. We expect a major boost of exports in many sectors of the EU economy.”

Phil Hogan, Commissioner in charge of Agriculture and Rural Development said: “This is a win-win for both partners, but a big win for rural Europe. The EU-Japan Economic Partnership Agreement is the most significant and far-reaching agreement ever concluded in agriculture. Today, we are setting a new benchmark in trade in agriculture. Tariffs on wine exports will disappear from day one of entry into force. For wine producers this means a saving of €134 million a year. Equally the Austrian Tiroler Speck, the German Münchener Bier, the Belgian Jambon d’Ardenne, the Polska Wódka as well as over 200 other EU Geographical Indications will now enjoy the same level of protection in Japan that they have in Europe.”

The Economic Partnership Agreement will increase EU exports and create new opportunities for European companies, big and small, their employees and consumers. The value of exports from the EU could increase by as much as €20 billion, meaning more possibilities and jobs in many EU sectors such as agriculture and food products, leather, clothing and shoes, pharmaceuticals, medical devices and others.

The agreement also opens up services markets, in particular financial services, e-commerce, telecommunications and transport. It guarantees EU companies access to the large procurement markets of Japan in 48 large cities, and removes obstacles to procurement in the economically important railway sector at national level. The agreement also protects sensitive economic sectors of the EU, for instance in the automotive sector, with transition periods before markets are opened.

The agreement will strengthen Europe’s leadership in shaping globalisation and the rules of global trade according to our core values and will safeguard the EU’s interests and sensitivities. In doing so, it contributes to address some of the challenges identified in the reflection paper on Harnessing Globalisation presented by the Commission as part of the White Paper process.

ESF issued a short press release today to welcome the political agreement and encourage a swift conclusion. (see attached)

Next Steps

Today’s agreement in principle covers most aspects of the Economic Partnership Agreement. In some chapters technical details still need to be ironed out, and there are also chapters that remain outside the scope of the agreement in principle. For instance, on investment protection. The EU has put its reformed Investment Court System on the table and will reach out to all our partners, including Japan, to work towards the setting up of a Multilateral Investment Court. Other areas that require further work include regulatory cooperation and the general and institutional chapters.

Based on today’s agreement in principle, negotiators from both sides will continue their work to resolve all the remaining technical issues and conclude a final text of the agreement by the end of the year. Then, the Commission will proceed to the legal verification and translation of the agreement into all EU official languages, and will consequently submit it for the approval of EU Member States and the European Parliament.

Background:

At the EU-Japan Summit held on 28 May 2011, the EU and Japan agreed to work towards a new framework for the bilateral relations and concurred on the desirability to pursue a Free Trade Agreement. A joint scoping exercise was conducted on the scope and level of ambition of a future Free Trade Agreement. It defines a number of non-tariff barriers that are considered by the EU as obstacles in accessing the Japanese market. Following the successful completion of the scoping exercise, in July 2012, the European Commission asked the EU Member States for their agreement to open the negotiations for a Free Trade Agreement with Japan. On that occasion, an impact assessment of the futureFree Trade Agreementwas released. In November 2012, the Council authorised the Commission to start the negotiations.

On 25 March 2013, the EU and Japan officially launched the negotiations for a Free Trade Agreement. The negotiations with Japan will address a number of EU concerns, including non-tariff barriers and the further opening of the public procurement market. The first round of negotiations was held in Brussels on 15-19 April 2013.

Japan is the EU’s second biggest trading partner in Asia, after China. Together the EU and Japan account for more than a third of world GDP.

Japan remains a major trade partner for the EU and Europe is a very important market for Japan. Japan is also a major investor in the EU

The EU exports over €80bn of goods and services to Japan every year. With €59.9bn of imports and €56,5bn of exports of goods, the EU has a small deficit of -€3.4bn in 2015, but in services, the EU imported €15.8bn in 2015, while exporting €28bn, which makes a benefit of €12.1bn in trade in services and a general positive balance of €8.7bn

ESF and EU-Japan FTA

The European Services Forum called all Members of the European Parliament to take their responsibility and ratify the EU-Japan Economic Partnership (EPA) when the vote will take place 12 December 2018 at the plenary in Strasbourg. See Statement here.

ESF actively participated to the launch of the EU-Japan FTA negotiations. Indeed, the large potential of development of services trade is hampered by regulatory restrictions In Japan. Contrary to the Transatlantic services market that is already very much integrated, this is not at all the case with Japan. ESF therefore strongly supports the launch of trade negotiations between the EU and Japan, since this will be a unique opportunity to negotiate new market access for the European services companies in Japan. Given the weight of services in the EU economy, in EU employment and in the EU external trade and investment with Japan, the Services chapter, as well as chapters in the interest of the services sectors (Investment protection, public procurement, IPR, regulatory cooperation disciplines), will have to be a major part of the agreement with Japan.

Since Japan is a developed economy and has already signed FTAs with trading partners following that model, ESF favours services negotiations with Japan on a negative list approach, which should cover market access negotiations not only at the federal level, including independent agencies, but also at provincial or municipal levels when services sectors (or part of their activities, like outlet licencing, etc. are regulated at those levels.

Among the major priorities for the services sectors are the following:

Japan Post is one of the major issue to be solved, since that company has be credited with discriminatory advantages in postal & express services, in insurance services and in financial services, with exceptions to regulatory requirements, etc.

The agreement should also comprise a comprehensive disciplines and market access to public procurement for services, with low thresholds and substantive coverage of all public institutions, at national, provincial and other relevant levels, and of all public entities (universities, hospitals, etc.).

The agreement should include high level investment protection at the EU level, with efficient investor-to-state dispute settlement. This will be essential, since according to UNCTAD Data base on Bilateral Investment Treaties, Japan has not signed any BIT with EU Members states.

Finally, ESF supports the work undertaken by the two countries in the two-way various Regulatory Reform Dialogues that took place over the last decade, aiming at reducing the number of unnecessary and obstructive regulations which hamper trade and foreign investment. We also acknowledge the EU-Japan Business Dialogue Round Table that is meeting since 1999. But unfortunately, there is no regulatory cooperation in the services sectors (except for the financial services, which is well appreciated and should continue), and the business round table dealt with services sectors only on rare occasions. The progress made in Legal Services where a smooth unilateral opening has been undertaken thanks to dialogue is well noted. Given that services activities are nearly all strictly regulated, there is a clear need to envisage the setting up of regulatory cooperation also in some services sectors, involving regulators all levels. ESF encourages the adoption of a strong regulatory cooperation chapter in the FTA, with binding disciplines, transparency rules and a revision clause, ensuring the continuity and efficiency of the dialogues.

EU and Japan trade deal welcomed by the EU Service industries

ESF issued a press statement today, 17 July 2018, welcoming the signature of the EU-Japan Economic Partnership Agreement in Tokyo. See Press-Release here.

ESF contributed to Event on EU-Japan EPA

On Friday 13 July 2018, on behalf of the Government of Japan, the EU-Japan Centre organised an event entitled: “The Japan-EU EPA: Expanding our Rules-Based, Free Trading Sphere to Create Economic Opportunities for Businesses”.

H.E. Ambassador Kazuo Kodama delivered a key note address highlighting the important economic opportunities the EPA brings to business in Japan, the EU and the broader global economy. Hosuk Lee-Makiyama, senior fellow in the Department of International Relations at the London School of Economy (LSE) and lead author of the European Commission’s impact assessment study of the EU-Japan Economic Partnership Agreement, shared his analysis on the implication of the EPA on the trade and investment environment as well as highlight key findings from his new LSE Research Paper, published on 16 July 2018. ESF Director also contributed to a panel of that event.

Joint Business call to a successful and inclusive conclusion of the EU/Japan negotiations.

ESF, along with other European and business organisations sent a joint letter statement to the Commission outlining how we want to foster a strong trade partnership Agreement/Free Trade Agreement between Japan and the EU. The statement reiterates the value of the EU-Japan trade relationship to our jobs in our respective sectors and also how it will improve regulatory coherence, and thereby expand trade and investment in both economies leading to more economic growth and employment in both Europe and Japan. This statement was co-signed by eleven interested parties representing business across the EU.

See attached the joint statement to a successful and inclusive conclusion of the EU/Japan negotiations:

ESF calls for conclusion of an ambitious EU-Japan EPA

Confident that the EU-Japan FTA talks are now reaching an end-game phase, ESF sent a letter on Monday, 12 December to Trade Commissioner Malmström urging the negotiators to move forward the negotiations in a constructive manner and make all efforts necessary to successfully conclude as soon as possible an ambitious and balanced EU Japan FTA (see Letter here). ESF also co-signed a joint European industry letter on the same issue. And finally, ESF and the Japanese Services Network (JSN) brought a united voice of the services industry from both parties in a joint statement calling for the conclusion of an ambitious EU-Japan agreement.

It was an opportunity to highlight the importance of the services chapter in the forthcoming agreement. The majors trading barriers that service companies encountered were highlighted (Japan Post and its discriminatory treatment in banking, insurance and express courier, Distribution services, Legal services, residency requirements, heavy regulatory burden, etc.). The EBC Chairman, Mr. Duco Delgorge, strongly invited the European Services Forum to continue to work with EBC during the negotiations, so as to gather our strength and push the negotiators towards similar priorities and results.

ESF, in a letter to all EU Trade Ministers dated 31st March 2014, called upon the European Union to clearly recommend the continuation of the negotiations, so that all economic sectors will have a chance to benefit from the EU-Japan FTA, which should reach a balanced but ambitious result. ESF encouraged the EU Commission and the Member States, when assessing the progress made for the mandated “one-year review” to take into consideration not only improvements made on the NTBs roadmap, but to also analyse the benefits of liberalisation and high-standard commitments on all negotiated issues, including services, that could be achieved through the conclusion of a deep and comprehensive FTA with Japan.

ESF also joined a EU business joint statement – issued at the occasion of the EU-Japan Summit to take place on 7th May in Brussels – calling upon the EU to clearly recommend the continuation of the negotiations, so that trade issues relevant to all economic sectors from across the EU can be addressed in the talks and not only those of the sectors listed in the roadmap.

ESF Director interview on EURObiZ on EU-Japan trade relations

EURObiZ Japan is a monthly magazine about trade and investment from Europe to Japan (http://eurobiz.jp/). As well as being distributed to members of the European Business Council in Japan, an organization consisting of 17 European national chambers of commerce, this business magazine is sent to an additional 2,500-plus European companies and individuals representing a broad range of industries, and to influential members of various non-European companies and European governmental bodies in Japan and Europe.

David C Hulme, Chief Editor of the EUROBIZ, talked with Pascal Kerneis, managing director of the Brussels-based European Services Forum (ESF). Following the launch of EU-Japan free trade negotiations, Pascal Kerneis visited Tokyo at the end of May for a series of meetings organised by the EBC. As a lobbyist, Kerneis often has the task of explaining trade in services to people whose thoughts on trade seldom stray beyond trade in material goods.